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Enacting Formula

 
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New sections 18B and 18C
22.  The principal Act is amended by inserting, immediately after section 18, the following sections:
Transitional provisions for capital expenditure incurred on industrial buildings or structures on or after 23rd February 2010
18B.
—(1)  Notwithstanding section 16(15) but subject to subsection (11), where a person incurs on or after 23rd February 2010 capital expenditure on the construction of a building or structure which is to be an industrial building or structure upon the completion of the construction works, other than one referred to in subsection (2), and the person —
(a)
on or before 22nd February 2010 —
(i)
has been granted the option to purchase the land or has entered into a sale and purchase agreement for the land on which the industrial building or structure is to be constructed;
(ii)
has entered into a lease agreement to lease the land on which the industrial building or structure is to be constructed; or
(iii)
has submitted an application to the Government or any statutory board —
(A)
to bid for the purchase therefrom of the land on which the industrial building or structure is to be constructed; or
(B)
to lease therefrom the land on which the industrial building or structure is to be constructed; and
(b)
on or before 31st December 2010, has made an application for planning permission or conservation permission to the competent authority in accordance with the Planning Act (Cap. 232) for the development of the land comprising the construction work,
there shall be made to that person an initial allowance and annual allowances in respect of that capital expenditure computed in accordance with section 16.
(2)  Notwithstanding section 16(15) but subject to subsection (11), where a person incurs on or after 23rd February 2010 capital expenditure on the construction of a building or structure which is to be an industrial building or structure by virtue of paragraph (f), (i) or (j) of section 18(1) upon completion of the construction works, there shall be made to that person an initial allowance and annual allowances in respect of that capital expenditure computed in accordance with section 16.
(3)  Notwithstanding section 16(15), where a person —
(a)
on or before 22nd February 2010 —
(i)
has been granted an option to purchase, or has entered into a sale and purchase agreement for, a new building or structure which is to be an industrial building or structure upon purchase other than one referred to in subsection (4); or
(ii)
has been granted an option to acquire or has entered into an agreement to acquire the leasehold interest in such a building or structure; and
(b)
on or after 23rd February 2010, incurs capital expenditure on the purchase of the building or structure or of the leasehold interest therein,
there shall be made to that person an initial allowance and annual allowances in respect of that capital expenditure computed in accordance with section 16.
(4)  Notwithstanding section 16(15) but subject to subsection (12), where a person incurs on or after 23rd February 2010 capital expenditure on the purchase of a new building or structure (including the purchase of a leasehold interest therein), and the building or structure is to be an industrial building or structure by virtue of paragraph (f), (i) or (j) of section 18(1) upon the purchase or the completion of any renovation or refurbishment works carried out on the building or structure upon the purchase, there shall be made to that person an initial allowance and annual allowances in respect of the capital expenditure, as well as the capital expenditure incurred on such renovation or refurbishment works, both to be computed in accordance with section 16.
(5)  Notwithstanding section 16(15), where a person —
(a)
on or before 22nd February 2010 —
(i)
has been granted an option to purchase, or has entered into a sale and purchase agreement for, a building or structure (not being a new building or structure) which is to be an industrial building or structure upon the purchase other than one referred to in subsection (6); or
(ii)
has been granted an option to acquire or has entered into an agreement to acquire the leasehold interest in such a building or structure; and
(b)
on or after 23rd February 2010, incurs capital expenditure on the purchase of the building or structure or of the leasehold interest therein,
there shall be made to that person annual allowances in respect of that capital expenditure computed in accordance with section 16.
(6)  Notwithstanding section 16(15) but subject to subsection (12), where a person incurs on or after 23rd February 2010 capital expenditure on the purchase of a building or structure (not being a new building or structure), or of a leasehold interest therein, and the building or structure is to be an industrial building or structure by virtue of paragraph (f), (i) or (j) of section 18(1) upon the purchase or the completion of any renovation or refurbishment works carried out on the building or structure upon the purchase, there shall be made to that person, in accordance with section 16 —
(a)
annual allowances in respect of the capital expenditure; and
(b)
an initial allowance and annual allowances in respect of capital expenditure incurred on such renovation or refurbishment works.
(7)  Notwithstanding section 16(15) and (16) but subject to subsection (11), where a person —
(a)
on or after 23rd February 2010, incurs capital expenditure on extension works carried out on an existing building or structure that (together with the extension thereto) is to be an industrial building or structure, other than one referred to in subsection (8), upon the completion of the extension works;
(b)
on or before 22nd February 2010, enters into a written agreement for a qualified person to carry out the extension works; and
(c)
on or before 31st December 2010, makes an application for planning permission or conservation permission to the competent authority in accordance with the Planning Act (Cap. 232) for the development of the land comprising the extension works,
there shall be made to that person, computed in accordance with section 16 —
(i)
an initial allowance and annual allowances in respect of the capital expenditure incurred on the extension works; and
(ii)
where the existing building or structure is not an industrial building or structure on 22nd February 2010, annual allowances in respect of any capital expenditure incurred before 23rd February 2010 on the construction or purchase or the residue of that expenditure, as the case may be, of that building or structure.
(8)  Notwithstanding section 16(15) and (16) but subject to subsection (11), where a person incurs on or after 23rd February 2010 capital expenditure on extension works to an existing building or structure, not being an industrial building or structure on or at any time before 22nd February 2010, that (together with the extension thereto) is to be an industrial building or structure by virtue of paragraph (f), (i) or (j) of section 18(1) upon the completion of the extension works, there shall be made to that person, computed in accordance with section 16 —
(a)
an initial allowance and annual allowances in respect of the capital expenditure; and
(b)
annual allowances in respect of any capital expenditure incurred before 23rd February 2010 on the construction or purchase or the residue of that expenditure, as the case may be, of the existing building or structure.
(9)  Notwithstanding section 16(15) and (16) but subject to subsection (12), where a person incurs on or after 23rd February 2010 capital expenditure on renovation or refurbishment works on an existing building or structure, and —
(a)
the building or structure is to be an industrial building or structure, other than one referred to in subsection (10), upon the completion of the renovation or refurbishment works; and
(b)
such renovation or refurbishment works are carried out pursuant to a written agreement entered into with a renovation contractor on or before 22nd February 2010,
there shall be made to that person, computed in accordance with section 16 —
(i)
an initial allowance and annual allowances in respect of the capital expenditure incurred on the renovation or refurbishment works; and
(ii)
where the existing building or structure is not an industrial building or structure on 22nd February 2010, annual allowances in respect of the capital expenditure incurred before 23rd February 2010 on the construction or purchase or the residue of that expenditure, as the case may be, of that building or structure.
(10)  Notwithstanding section 16(15) and (16) but subject to subsection (12), where a person incurs on or after 23rd February 2010 capital expenditure on renovation or refurbishment works on an existing building or structure, not being an industrial building or structure on or at any time before 22nd February 2010, that is to be an industrial building or structure by virtue of paragraph (f), (i) or (j) of section 18(1) upon the completion of the renovation or refurbishment works, there shall be made to that person, computed in accordance with section 16 —
(a)
an initial allowance and annual allowances in respect of the capital expenditure; and
(b)
annual allowances in respect of any capital expenditure incurred before 23rd February 2010 on the construction or purchase or the residue of that expenditure, as the case may be, of the existing building or structure.
(11)  For the purposes of subsections (1), (2), (7) and (8), no allowance shall be made to a person in respect of any capital expenditure incurred on an industrial building or structure after the date of issuance of the temporary occupation permit for that building or structure or the end of the basis period for the year of assessment 2016, whichever is earlier.
(12)  For the purposes of subsections (4), (6), (9) and (10), no allowance shall be made to a person in respect of any capital expenditure incurred after the completion of the renovation or refurbishment works referred to in those subsections or the end of the basis period for the year of assessment 2016, whichever is the earlier.
(13)  No allowance shall be made under this section in respect of any capital expenditure incurred on the construction of a building or structure for which an allowance is made under section 18C.
(14)  In this section —
“new building or structure” means a building or structure which —
(a)
has not previously been used by any person; and
(b)
was purchased by a person from another person who —
(i)
constructed that building or structure; and
(ii)
was not granted initial allowance in respect of that building or structure under section 16;
“qualified person” means —
(a)
any person who is registered as an architect under the Architects Act (Cap. 12) and who has in force a practising certificate issued under that Act; or
(b)
any person who is registered as a professional engineer under the Professional Engineers Act (Cap. 253) and who has in force a practising certificate issued under that Act.
Initial and annual allowances for certain buildings and structures
18C.
—(1)  Where any person proposes to incur or has incurred on or after 23rd February 2010 qualifying capital expenditure on the construction or renovation of a building or structure on industrial land for which an application for planning permission or conservation permission is made to the competent authority in accordance with the Planning Act (Cap. 232) on or after 23rd February 2010, he may apply to the Minister or such person as he may appoint, between 1st July 2010 and 30th June 2015 (both dates inclusive) for such construction or renovation to be approved for the purposes of making an allowance under this section in respect of such expenditure incurred by him.
(2)  Where the Minister or such person as he may appoint, on an application made to him under subsection (1), is satisfied that the construction or renovation of the building or structure on industrial land promotes the intensified use of such land for the purposes of such trade or business as may be prescribed by regulations, he may, by notice in writing, approve the construction or renovation for the purposes of this section, which approval shall be subject to such conditions as he may impose, including the particular trade or business for which the building or structure is to be used upon completion of construction or renovation.
(3)  Where in the basis period for any year of assessment the person has incurred any qualifying capital expenditure on the approved construction or approved renovation, as the case may be, there shall be made to the person for the year of assessment in the basis period for which the expenditure was incurred an allowance to be known as an “initial allowance” equal to 25% of the expenditure.
(4)  Subject to subsections (5) and (6), where the person is, at the end of the basis period for any year of assessment, entitled to a relevant interest in the building or structure which is being used for the purposes of the specified trade or business and in respect of which qualifying capital expenditure is incurred, there shall be made to the person for that year of assessment an allowance to be known as an “annual allowance” equal to 5% of the qualifying capital expenditure incurred by him.
(5)  No allowance shall be made under subsection (4) for any year of assessment unless more than 80% of the total floor area of the building or structure is used, at the end of the basis period for that year of assessment, by any one person or partnership for the purposes of the specified trade or business.
(6)  Any annual allowance made to any person under subsection (4) in respect of an approved construction or approved renovation for any year of assessment shall not exceed the amount of qualifying capital expenditure remaining unallowed as at the beginning of the basis period for that year of assessment.
(7)  For the purposes of this section, qualifying capital expenditure incurred by any person on the approved construction or approved renovation, as the case may be, prior to the commencement of his trade or business shall be deemed to have been incurred by that person on the first day he carries on that trade or business.
(8)  Where the person fails to comply with any condition imposed under subsection (2) in respect of the approved construction or approved renovation, the Minister or such person as he may appoint, may, by notice in writing, revoke the approval granted under that subsection.
(9)  Notwithstanding section 74(1) and (4), where an approval has been revoked under subsection (8), the Comptroller may, at any time, for the purpose of making good any loss of tax attributable to such revocation of approval, assess the person who has utilised the allowance made under this section at such amount or additional amount as according to his judgment ought to have been charged; and this subsection shall also apply, with the necessary modifications, to any assessment which results in any unabsorbed allowances or losses.
(10)  Where, in the basis period for any year of assessment, the specified trade or business for which purpose the building or structure is used, produces income that is exempt from tax as well as income chargeable to tax, the allowance for that year of assessment shall be made against each income for that year of assessment in such proportion as appears reasonable to the Comptroller in the circumstances.
(11)  A person who has incurred qualifying capital expenditure on the approved construction or approved renovation shall maintain and deliver to the Minister or such person he may appoint or the Comptroller, in such form and manner and within such reasonable time as the Minister, the person or the Comptroller may determine, the relevant records of the approved construction or approved renovation, and such other particulars as may be required for the purposes of this section.
(12)  In this section —
“approved construction or approved renovation” means the construction or renovation, as the case may be, of a building or structure on industrial land approved under subsection (2);
“industrial land” means any land zoned for the purpose of “Business 1” or “Business 2” (other than “Business 1 White” and “Business 2 White” ) under the Master Plan, and includes such other land as may be approved by the Minister;
“Master Plan” means the Master Plan as defined in the Planning Act (Cap. 232) which is effective on the date of the application for planning permission or conservation permission referred to in subsection (1);
“qualifying capital expenditure” means the following types of capital expenditure which are incurred in respect of an approved construction or approved renovation, between 23rd February 2010 and the date of completion of that approved construction or approved renovation (both dates inclusive):
(a)
costs of feasibility study on the layout of the building or structure;
(b)
design fees of the building or structure;
(c)
costs of preparing plans for obtaining approval for the building or structure;
(d)
piling, construction and renovation costs;
(e)
demolition costs of an existing building or structure for which an allowance was not made under section 16;
(f)
legal and other professional fees in relation to the approved construction or approved renovation; and
(g)
stamp duties payable in respect of title of the building or structure;
“relevant interest”, in relation to any qualifying capital expenditure incurred on an approved construction or approved renovation of a building or structure, means the interest in that building or structure to which the person who incurred the expenditure was entitled when he incurred it;
“specified trade or business” means the trade or business specified in a condition of approval under subsection (2) as one for which a building or structure shall be used upon completion of the approved construction or approved renovation, as the case may be.”.